Prices in shops are falling for the first time in nearly three years, new figures show.
Retailers slashing prices to get rid of summer stock helped overall shop prices fall into deflation in August for the first time since October 2021, according to an influential retail group.
Deflation is when the general level of prices for goods and services decreases, and happens when the inflation rate falls below 0 per cent.
Shop prices in August were 0.3 per cent lower than a year earlier, the British Retail Consortium (BRC)-NielsenIQ Shop Price Index found.
The figure is down from inflation of 0.2 per cent in July and below the three-month average rate of 0 per cent.
The survey period covered the first week of August.
Retailers will continue to work hard to keep prices down, and households will be happy to see that prices of some goods have fallen into deflation,
Helen Dickinson, chief executive of the British Retail Consortium
The overall decline was driven by deflation of 1.5 per cent of “non-food” products, which refers to products like clothing, furniture and electronics.
Helen Dickinson, chief executive of the BRC, said it reflects “retailers discounting heavily to shift their summer stock, particularly for fashion and household goods”.
“This discounting followed a difficult summer of trading caused by poor weather and the continued cost-of-living crunch impacting many families,” she said.
Meanwhile, food prices increased by 2 per cent in August, compared with the previous year.
Nevertheless, the rate that prices are rising continues to slow, and this month was the lowest since November 2021.
Fresh food inflation slowed to 1 per cent in August – with fruit, meat and fish seeing the biggest monthly decrease since December 2020, the BRC said.
Ambient food inflation – which means products that can be safely stored at room temperature, such as tinned goods, crisps, tea bags and biscuits – remained more stubborn at 3.4 per cent.
As a result, we could see renewed inflationary pressures over the next year
Helen Dickinson, chief executive of the British Retail Consortium
“Retailers will continue to work hard to keep prices down, and households will be happy to see that prices of some goods have fallen into deflation,” Ms Dickinson said.
“The outlook for commodity prices remains uncertain due to the impact of climate change on harvests domestically and globally, as well as rising geopolitical tensions.
“As a result, we could see renewed inflationary pressures over the next year.”
Mike Watkins, head of retailer and business insight at NielsenIQ, said many food retailers introduced price cuts to help drive sales during the “summer of sport”, amid the popularity of events including the Paris Olympics and Euro 2024 football tournament.